Category: Retailer2Retailer

In January my son Zachary, who is now 17, and I took our first father-son trip to an industry trade show for the SE Flooring Market in Atlanta. As a young man, Zack was intermittently around during my corporate days in Kansas City but he had never been to a vendor show of any size.

During our 60-hour jaunt that included drive time to and from Atlanta we had time to talk about life, business and the future. I look forward to taking that same type of trip with my daughter Morgan in the not-too- distant future. Interestingly enough, I thought back to my dad taking me to Atlanta back in the early ’80s when we attended the show at the Atlanta Merchandise Mart.

We walked the floor and worked several prearranged meetings with our vendors from the largest manufacturers to the smallest distributors. As I watched Zack interact with the vendors it occurred to me that he had been listening to much of what I had said over these last several years. Even more enlightening for him was his mom and dad were in a really big industry that provides profitable products and services to the masses and those numbers and possibilities began to become very real.

Sally and I made a rule years ago that we would never push our children into the family business. In addition, we made it clear they both needed to attend and finish college and also work for another company or two for at least a year before they were allowed to come on board. This way they would clearly understand what others expected from them, so they could grow to expect the same or more from themselves.

Prior to leaving the show Zack asked me tons of questions about flooring, business and whether I felt we made the right decision by being in the flooring business. To that I replied, “Absolutely!” We all have things we wish we could change; however, the path unknown may not have been any brighter.

In the wake of a young Florida man winning the $450 million Mega Millions lottery, Zack asked me one final question, “What if you won the lottery, dad? What would you do?” I thought for a moment and told him I would give back to the industry that got me to where I am now by helping to fix the greatest issue we will face in the future.

I would fund and build a state-of-the-art training facility for flooring installation teams to learn this valuable trade. Based on their performance I would open it up to anyone free of charge in hopes of turning thousands of young men and women into professional tradespeople rivaling the best electricians, plumbers and HVAC contractors with further hopes of them training their sons and daughters to do the same. In addition to learning the trade itself, we would teach them the basic premise of business finance and profit and loss while providing systems for them to retain benefits and create a retirement plan for their families.

What if as an industry, we recognized that if we all came together in a small way with a similar purpose then we would have the resources necessary to accomplish this goal in our lifetime. Being the odds of winning the Mega Millions are about one in 259 million, there is always a chance.

Scott Perron is the president of 24-7 Floors and Floor4Pros based in Sarasota, Fla. He is also an industry trainer and motivational speaker. He can be reached at scott@24-7floors.com or 860.250.1733.

Over the last several years a significant trend has occurred: Millions of square feet of carpet is being replaced by hard surfaces. The look of hardwood has always been desirable in the U.S. and now there are many categories that offer the many visuals found in real wood, including tile, laminate, luxury vinyl plank and WPC.

Although similar in appearance, no item can replace the real thing when it comes to overall beauty and visual impact. Clearly there are challenges with regard to moisture resistance or maintenance of hardwood and laminate, which have paved the way for products such as LVP. For hardwood-centric retailers, the key to maintaining wood’s share of the market is to present the category with greater confidence, explaining to the consumer that she can have the real thing “for a few dollars more.”

We have found—in both wholesale supply and residential replacement—the key always comes down to educating the consumer or contractor on the options they have at their disposal. Quite often, however, retailers and distributors do an inadequate job of training staff members so they can be well versed when recommending these products for consumer use. Make it a goal to educate your staff on the construction, maintenance, warranties, application, preparation and proper installation of hardwood floors.

For those retailers selling and installing hardwood flooring in parts of the country where moisture or climate can affect the product, be especially diligent to send your estimators, sales professionals and installation teams to the many classes offered by your local supply houses, distributors and industry associations. In these affordable classes attendees will learn valuable information that can save you tens of thousands of dollars—even hundreds of thousands of dollars, in some cases—over the long term. In addition, these skills will build confidence in your team and set you apart from others in our field who are simply being penny wise and dollar foolish.

Accessories as a profit centerIn addition to learning the proper procedures under the manufacturer’s warranties for installing their products (i.e., mitigating moisture, crack suppression and proper adhesion) my recommendation is to add on additional services such as wall base/casing installations, painting and maintenance services.

Here at 24-7 Floors and Floor4Pros, for example, we sell a large amount of wall base in proportion to our contemporaries simply because we stock the materials and provide custom painting of the product before it arrives at the consumer’s home. More important, we offer it to every customer at the time of sale. Internally, we estimate that for every 1,000 square feet of hard surfaces sold, there is an opportunity—on average—for 300 lineal feet of new trim, shoe molding or quarter round to be added on.

Are you looking to raise your average ticket with little effort? Then I suggest you sell trim on every job and incentivize your RSAs to do so while proving to your customer and their potential referrals that you are the experts in your market.

Scott Perron is the president of 24-7 Floors and Floor4Pros based in Sarasota, Fla. He is also an industry trainer and motivational speaker. He can be reached at scott@24-7floors.com or 860.250.1733.

Nostradamus was said to be a prophet who lived in the 16th century, spawning many tales of his ability to predict tragic events far into the future. While this seer may have been misinterpreted during his lifetime, one thing is for sure: He was not in the flooring business.

Now please do not take my comments to suggest a great flooring famine or plague is on the horizon. It is not my intent to derail the last several years of recovery many have enjoyed or to cast a spell of negativity about the coming year; however, to reference a presentation I gave early in 2008, “be prepared.”

My message, simply stated, is to take a good, hard look at the road ahead and pave a lean but calculated approach to running your business. Although I feel very strongly 2017 will be good for sales, my concerns are the increased costs many of us do not factor into our budgets until after we feel their effects.

Our major suppliers of carpet and some hard surfaces have announced price increases from 5% to 15% on goods being shipped after early or mid-January. While price increases handled properly result in higher gross margin dollars, be sure to adjust your sales prices immediately so you don’t fall victim to a lag in margin for being a nice guy. As of this writing fuel prices have escalated over 40 cents per gallon here in the Southeast since Nov. 1 and most economists are predicting an additional 40 to 70 cents per gallon increase over the next six months. This not only affects the cost of your inbound freight but also your rolling expense for fleet vehicles, estimating costs and the deliveries you provide. Failure to budget these costs can take an unnecessary bite out of your net dollars.

Next are the increased costs in interest expense as the borrowing rates escalate, resulting in a larger cost of carrying debt or supporting cash flow. More importantly, if you are not showing healthy performance in profits and cash flow, my close friends in banking at the high level say their direction is to tighten the noose, as they are adverse to any risk in the home improvement sector. Increase your credit line power to the maximum you feel comfortable with as this may not be available to you if future needs arise, particularly if we experience some type of market correction. Get funding in place now if you had a strong P&L for 2016 and other financials to support your request.

Finally, make a conscious effort to look at increasing your overall gross profit margin by simply raising your prices. Many dealers feel 30%, 35% or 40% is a bar that cannot be vaulted over, which is truly a matter of perception and not reality. When your staff tells you it’s not possible, train them to see the competitive landscape or hire new people that can sell. If Empire Today and other major players in our industry can dwarf our perceived margins by using salesmanship over the rest of us, then they deserve the sales. Their systems build value in starting at a very high suggested retail price and then progressing like the negotiation for any other large ticket you might buy.

More profit dollars means more cash to add on new profit centers; upgrade your equipment; train your teams or spend more dollars marketing and networking. When large private equity firms are buying these kinds of companies as well as some of their supply chain, the proverbial writing is on the wall.

In 2017 it will be 29 years since I entered this industry, where it has been my wish to remain a student of the game, with the goal of remaining relevant. Our retail company prides itself on under promising and over delivering. This past month, an exchange between a client and me prompted this article in the hopes of teaching all dealers how we might become one step better at our craft.

Mrs. M came to us via a referral from previous clients and through online comments regarding our customer service and professionalism. She was experiencing challenging issues with an engineered wood floor she purchased from a large retailer of hardwood. When I inspected the floor the product—which was engineered Brazilian cherry—was peaking, cupping and separating. Once a moisture test was performed all parties realized the relative humidity (RH) was beyond what any floor or adhesive could withstand without proper preparation. Mrs. M was very precise at the time of our meeting with dates, pictures and communications documenting the issues. She later shared that her career included a high-level executive position with a major retailer that demanded such detail on a daily basis.

Several months went by and Mrs. M reached out again to contract us to replace the flooring at her expense, which was in excess of $20,000 to remove, apply a moisture mitigation system and re-install. She selected a Brazilian koa (tigerwood) floor, which has lots of character, color variance and, as any natural product possesses, no two boards that are alike.

As our men were finishing the trim work she and Mr. M visited my office where she voiced her concerns about the process and used the word “specificity” as a stern suggestion for items we need to include when speaking with customers about projects. She cited several items that were disturbing to her so I headed to the house.

When I arrived at the site our men were installing trim and finalizing the installation. The floor was absolutely breathtaking and the workmanship was outstanding. Mrs. M walked me through the project and made her concerns clear.

The major concern was the flooring was not as she pictured it with many more beige pieces versus orange than she anticipated, and the trim we used was not the same profile as in the other rooms. Finally, she was disappointed that although we used a local crew to perform a “dustless removal” of the previous flooring, some of the debris had made its way into a closet that may not have been properly covered during the process. Now, although many of you may feel these items should be a given on a project like this—based on the nature of wood and construction having its idiosyncrasies—the fact of the matter was the customer was not satisfied with the communication from our team.

Specificity. The quality of being specific means it is our responsibility to inform the customer verbally and in writing of the items that need to be expected during the process of having a project installed. We should not bury these disclaimers in small print on our invoices but instead be candid with the client and communicate effectively through the process with compassion, as these types of projects can be very unsettling.

Mrs. M, thank you for helping to make us better, which will only result in creating yet another level of differentiation between the best contractors and those who treat their customers as just a number or a dollar sign.

As I think back to my childhood and the early days growing up in our small family business, there are so many lessons I can extrapolate when it comes to running a successful business. But none is more important than having integrity, which is defined as “the quality of being honest and having strong moral principles.”

Back in the late 1970s an owner’s success was not only related to profit but more importantly the integrity of its leadership. As a child I remember there were several carpet and linoleum stores in the area surrounding our little central Connecticut town. Most of those were family businesses and many had a lifespan that went on for decades with clients who sang their praises and referred them as a matter of course.

Over the last 25 years my business travels afforded me the opportunity to meet thousands of salespeople, managers and owners. Although many were monetarily successful, the ones I was most impressed with are those who do what they say they are going to do—and for the right reasons. Like many of you I have put my trust in others many times only to be disappointed by their actions later. As we look across our industry the landscape has certainly changed and many of our competitors lack integrity—they are solely focused on dollars rather than people. But there is a silver lining. The real standout companies of this generation have finally made it their mission to operate with unadulterated integrity when dealing with vendors, clients and staff.

Here are five examples of integrity we can apply in business:

1.When you make an agreement in business, honor it.

2.When you hire staff to represent your company, take responsibility to train them properly on your mission, values and processes.

Hold people accountable to a standard of measured performance with updated trainings and reviews.

4.Be transparent with your clients and enthusiastic about treating them with respect.

5.Make your business about people—which includes your staff, vendors, installers and clients. Focus on their needs first and the money will come. If you people get what they want, they will return the favor.

It is our responsibility to instill integrity into the generations that will follow us and teach them the value of strong, long-term relationships. My parents taught me about this very important life choice, and for that I am thankful.

Now that 2015 is over I imagine some of you are looking back and thinking, “What happened?” The last 12 months cranked by in a flash and based on the activity we saw in our market it’s no wonder. Construction is busy, real estate inventory is low and although the rates are edging up money is still cheap. So, what should we look at as 2016 begins?

History tells us certain industries experience adverse reactions when we are in an election year. Based on all the craziness on both sides of the aisle it would appear we are going to have a very entertaining political race. That being said, barring any unforeseen catastrophe or major world event I believe we will see modest growth in flooring while the baby boomers retire, real estate stays strong and lots of sharks continue to enter our pool of competitors.

Many of our major adversaries are expanding their locations, profit centers and advertising efforts in the hopes of capturing a greater share of the market while trying to punch the independent in the gut. Hard surface specialists like Floor & Decor and others are marching down the field with robust campaigns, lengthy store hours and millions of dollars in stock looking to capitalize on consumers’ needs and competitors’ weaknesses. Several groups have elected to grab more of the pie by diversifying into cabinets, countertops, maintenance and even furniture in an attempt to take your customer.

However, I find a lack of the “serve” mentality across this world of behemoth merchants. This challenge of offering high quality service to customers emerges constantly with this type of retailer as the tasks of properly training staff, understanding customer needs and providing quality installation are very difficult to manage on a mass scale. Our concern is to do what these mass merchants cannot: establish relationships, provide products and services the customer actually wants and effectively build business through referrals.

I’m not so sure it makes sense for most dealers to delve into new segments like kitchens and baths where the exposure is high and the investment far outweighs the ROI one might receive if he worked on his core competencies instead. New ideas always intrigue the retailer but tend to fizzle like New Year’s resolutions when actually attempted.

In short, stick with what you know and be the best. Our goal is to improve on all of our systems by polling our customers, vendors and staffs to find out what they need to make their lives simpler and more efficient. Measuring all results in terms of revenue and marketing performance, establishing a concise sales system that is consistent and hiring or training staff members to hunt for new business is the “serve” philosophy.

When I shop other dealers many are still missing the basics, which include a clean, well-organized showroom; professional web presence that includes social media, SEO, testimonials and video content; and promotions such as long-term financing. In addition, most don’t seize the opportunity to wrap vehicles, work trailers or display yard signs.

More important, employees who represent these dealers generally fall into two categories: seasoned veterans with old school techniques and no real desire to adapt to modern methods or the inexperienced new hire who was probably put into that seat because he has a pulse, was given a few PK sessions and was asked to man the floor. Your single greatest asset is the people you surround yourself with because—just like picking a spouse—they can account for 90% of the happiness or sadness in your life.

The International Surface Event in Las Vegas begins this week and the industry is geared up for another jam-packed week with hundreds of manufacturers, distributors and brokers selling their wares, showcasing new products for the coming year and capitalizing on a massive audience of dealers, installers, designers and architects.

Attendees will be lined up by the thousands to see the latest offerings, eager to find new selections to help them meet their sales goals. Show staff tells me that registration is very strong and this year’s event is firing on all cylinders as our chosen profession comes off another promising year of growth.

Most important is the education program, which is full of speakers covering a wide variety of topics unrivaled in any regional, mill-aligned or buying group event based on sheer size and scope of information.

My seminar this year, “Exponential Business Growth: How Retailers Can Maximize Sales While Minimizing Overhead,” will be presented Thursday, Jan. 21, at 3:45 p.m. I am not showcasing any of the great teachings afforded me by my mentors or focusing primarily on a single subject such as advertising. Instead I have chronicled actual experiences of our journey building a brand new company from the ground up, which started as an experiment and opened in October 2014.

This presentation is about our attempt to dispel the theory that retail flooring has only a standard model that cannot withstand gross deviation. We decided if it worked we would use it as the basis to build a platform that others could enjoy, allowing them to enter into a career where they have the ability to prosper while being their own boss.

How? By using a non-traditional showroom that is open by appointment only and relies solely on hunting or referral marketing to build the vast majority of its business. For many of you who have sat behind a retail desk for several years this may sound like a godsend, right?

If you want more details, our location is a 9,300-square-foot metal warehouse with a 16- x 30-foot showroom with one office, two bathrooms and a loading dock. We are located in an industrial park off the beaten path. Our staff consisted of three full-time employees—including myself—and one part-time salesperson for all of 2015. Using a shop-at-home model we entered the market in Q4 of 2014 and managed to close $143,000 in sales by December. Profit margin finished in the low 30s but based on our low cost of overhead we actually made a net profit in our first three months.

In 2015 we grew sales to just shy of $800,000, increasing margins to the upper 30s and after expenses—including 8.9% for personnel, 4.7% for occupancy, 2.8% for advertising, among many others—we put 16.9% in the WTL column which makes up all owner’s benefits, management fees and net profit dollars. These results are giving us the ability to invest in the areas we feel are most important to us in our infancy which include marketing, controlled inventory and efficient systems for making the process simple for customers, vendors and staff.

Although there are many other types of companies that make millions we feel strongly that this concept is one that will grow in 2016 and beyond. If you want to join us for more information on why and how this model can be successful and what is next in flooring retail, register at tisewest.com.

What is it about the idea of cold calling a new prospect or customer that makes sales professionals dread it? It has been ingrained in our heads since the beginning of time that cold calling is somehow difficult, ineffective and not worth our time. Well folks, I am here to tell you that preconception is dead wrong.

Granted, in times of economic difficulty, cold calling will produce fewer results simply because people are not actively spending money. However, during times of economic growth, as most of you are experiencing now, it is not only effective but can also be fun.

One of the beliefs you may have heard me preach is to be proud of who you are, who you work for and be sure to tell everyone you meet about it. During conversations, I rarely get through the first couple of minutes without introducing our business and what we do for a living.

How many times have we, as flooring experts, walked into a home or building that clearly needs our services, only to walk out without ever mentioning that we could be of help? How much effort would it take to reach into your wallet or pocketbook, offer a business card and introduce yourself to a potential customer?

Let’s take it up a notch and consider the idea of producing some inexpensive brochures that include your contact information, quality images of new floor covering and the list of product categories you carry. (Remember, less is more.) Attach that to a business card and you are armed and dangerous. I dare you to take this simple tool and walk into one of the many medical offices or condominium facilities in your area. Visit each office and introduce yourself to the office manager. Simply state that when she considers redoing the flooring in the space, you will be ready to service her needs. You will find that 99% of the time you will not be thrown out and you may even tap into individual potential customers looking for residential work.

Of course these lead sources are not restricted to the medical community—there is an endless list of possibilities when it comes to building your portfolio. Every restaurant, office building, retail store, insurance agency, law firm and virtually any building you walk into is your potential customer.

Many businesses are flourishing in this economic climate and are considering the possibilities of remodeling. In our market there is a plethora of new projects in which we are bidding luxury vinyl plank, tile and modular carpet. In many cases we are a welcome sight during these cold calls, as these folks are already gearing up to get estimates and schedule consultations.

I suggest that you carve out a set number of hours (between two and four per week) to attempt this underestimated form of marketing. Be diligent and efficient with your time by mapping out exactly where you will prospect during these hours. Measure the important details of all the locations you visit and be sure to accurately document your results so you will be able to handle the questions that come up and be better prepared for your next encounter.

There are two main advantages of this kind of cold calling: You can accomplish your goals with minimal advertising costs as it is primarily labor intensive, (if you can even call it labor) and, best of all, you will differentiate yourself and your business from your competitors, especially the big boxes.

If you have the guts to give this a try, shoot me an email and let me know how you made out.

I read an article recently written by one of the industry trainers for whom I have a great deal of respect, speaking negatively about the “art” of networking. My goal is never to bash a colleague and I’m not going to start now, but without a doubt in my mind, networking is not only a phenomenal way to build a business, but it has many other hidden benefits as well.

As newbies to this market for the last two and a half years and being in business under our new brand, 24-7 Floors, since October 2014, we needed a way to launch our company and get connected to the people who are in the know here in the Sunshine State.

So let’s talk results. In the first five months of our business almost 85% of of our tickets and 79% of our revenue has been generated by some form of networking. The only advertising dollars we spent outside of those efforts was for a two-month stint in a local direct mailing piece that yielded enough dollars to cover the ad costs but resulted in one-sixth the return on investment of networking.

Let me explain a few things about how our operation differs from the mainstream flooring retail locations. We operate out of an industrial location off the beaten path, and we do not maintain typical retail hours. As one might imagine, this frees us up to go out and hunt down work while others are waiting for it to come in. In addition, we utilize technology to communicate with our clients in ways most of our competition cannot get their hands on. We are also working on perfecting the system through which a referral or lead enters our business, all the way to the delivery of our thank you gift. It used to be, “Build it and they will come,” but for us it’s “Build it and they will call or email.”

Between our sales staff of two, we spend approximately 10 to 16 hours per week networking directly with those who can refer us business. It varies, as some networking includes weekly meetings or lunches, and some happen monthly. In calculating the dollar volume we have received from just one networking group we attend, from Oct. 1 to Feb. 28 we received $42,000 in closed business with an average margin of more than 40%. The annual investment for this group is $1,100, including a meal each week. That is an average of $8,000 per month which, annualized, could spell close to $100,000 in business and possibly $35,000 to $40,000 in gross profit dollars for $1,100 in cost and 75 hours of time for the year. My guess is you spend a lot more time making much less money.

Other benefits include introductions to new businesses with qualified professionals whom we will use personally and refer to clients. In fact, last month I gave out 18 referrals to one of my groups and, in turn, they referred me. When I remodeled our building I used at least 10 contractors and professionals in our groups for everything from insurance to painting.

We watch out for each other, listen for referrals to give our partners and spend time together in social settings. I am most honored to call these people my friends, and from the infancy of our involvement I saw long-lasting relationships being forged as many of these folks have been together for years.

If networking is a bad thing, then I should undoubtedly be in a timeout.

“In the absence of great leadership, people will listen to anyone who steps up to the microphone.” In an instant I remembered that quote used by Mark Fernandes, chief leadership office at Luck Companies, at his Values Based Leadership educational session at Surfaces East this past October, as I had said the same thing hundreds of times.

Fernandes talked about both his personal and professional histories, and how this mindset established many years back was the reason for his success. He cited a number of businesses/brands that have pierced the veils of tragedy and defeat by instilling the simplest of ideas with aligning company and employee values from the top of their structures to the bottom—a feat that I assure you is easier said than done as it leaves no room for flexibility.

It is part of my mantra to explain to employees that my goal is to help them get what they want because, in turn, the company will get what it wants. Yet the margin for error in this exercise cannot be what we perceive it to be, but rather what is right—period.

Fernandes quoted facts from three major firms—Hay Group, Gallup and Carnegie—where studies reveal that a staggering 75% to 80% of all workers interviewed are currently disengaged at work, going through the motions or just showing up for a paycheck. His last report revealed that his company has 91% engagement—a result he promised took hard work day in and day out.

Not convinced? Next he told us how 2⁄3 of his personal income is derived from feedback on his performance from his employees and management. How many of you would put that power in your employees’ hands? The message to be heard here is you can’t just talk the talk; you have to walk the walk.

Big names like Trader Joe’s, Amazon, SAS, Google, Hobby Lobby, Southwest and more have empowered their own success by addressing the most crucial issues present in any business: leadership and engagement. As the new generation of employees and customers emerge, gone are the days of old school tactics practicing “motivation by intimidation.” This young group of smart individuals has no problem jumping from job to job several times before they settle into the right opportunity where arrogance and egomaniacal behavior are not the norm. Many of these millennials have watched their parents work 50 to 60 hours a week or more just to end up with the short end of the stick. The companies mentioned above have embraced new leadership principles and are attracting applicants by the thousands, which results in the companies having the best resources to pull from when adding members to their teams.

I could write for hours about this subject and not even scratch the surface of its power in building your companies. As luck would have it, Fernandes is presenting again at Surfaces in Las Vegas on Tuesday, Jan. 20 at 8:45 a.m. If you are in town, make it a point to spend 90 minutes in this man’s company; I promise you it will be time well spent. If you are like me it will bring a fresh perspective to the future of your business and alter its course for the better.

I suggest you write down your personal and business goals. Begin to realize the power in leading with strong values and start by living those ideals daily. Hold yourself most accountable for all results and use one simple rule when determining whether you are on the right path: the Golden Rule.